This is a BLOG from Mark Cochrane of Business Strategies Group in Hong Kong. We've been keeping a close watch on B2B media and business information in Asia since 2000 and look forward to sharing insights with you.

It has really been the year of Alibaba, so appropriate that we go out on another note about them. There's an interesting snippet on Thomson Financial (reposted here by Forbes) in which Alibaba.com David Wei reportedly tells the FT Deutschland that the company will spend "about" 60% of its US$1.7 billion IPO proceeds on acquisitions.

Wei goes on to say that "we have decided to invest more in Europe", adding "with more than 20 million SMEs, Europe is a very important market for us".

This follows a report we ran in early October about the opening of their Geneva office and VP Kenneth Liu's comment "I see the day coming where a major share of trading in Europe will take place on our website”.

Friday, December 28, 2007

The Christmas holidays have seen me very inactive on this blog but I assume a large number of our readers have also been thinking about things other than work these days. I hope so!

However, catching up on e-mails, I was pointed towards an interesting development over on the Yahoo! homepage where our friends at Alibaba - in which Yahoo! owns a 40% stake - have been able to advertise in some absolutely prime 'real estate' at the top of the "Marketplace" section.Nice if you can get it!

Thursday, December 20, 2007

It hasn't been the easiest year for my friends at the Thailand Convention & Exhibition Bureau. They've had various leadership changes to contend with along with some ongoing political uncertainty in Thailand. It's a testament, then, to their efforts and Thailand's continuing appeal to events organisers that the Bangkok Post has them reporting a 22% increase in MICE arrivals this year.

The new leadership team of Chairman M.R. Disnadda Diskul and President Natwut Amornvivat are reportedly targeting a 19% increase next year to 947,600 arrivals and MICE revenues of Bt65 billion (US$2.1 billion). With elections due this Sunday, they will be hoping for a more 'normal' year next year, allowing them to focus on promoting Thailand's combination of charm and business appeal.

Wednesday, December 19, 2007

I have to confess that, until two weeks ago, I'd never heard of Network 18 or its previous incarnation, TV18. In a very short period, however, the company has muscled its way into the heart of India's business media scene. Three key deals have been announced:

Tuesday, December 18, 2007

The Asia Media Journal has been published for several years now by the team at Media Partners Asia, the only other consulting firm in the region of which I'm aware which focuses seriously on the media (happily, in areas largely complementary to those we look at). They've recently taken some of the journal's content online.

I was struck by a report on their own advertising research. MPA's Vivek Couto is quoted saying that "By the end of 2008, Asia will represent more than 20% of global ad spend, fuelled by the expansion of China and India". The report is predicting overall Asian market growth of 6.7% in 2007 and 8.5% in 2008. In India, "having peaked last year, ad spend growth...is expected to come in at just above 20% this year before slowing to 16% in 2008".

There's lots more insight in this article which I recommend you look at.

The UK Press Gazette reports on EMAPs failure to sell its B2B division for GBP1.3 bn. "Why was no one willing to pay EMAP's fair price?" they ask. The article goes on "One anonymous source told The Times that Emap’s asking price was “much higher” than it expected".

EMAP's B2B division, it says, "routinely generates 30 per cent operating margins [and] isn’t a visibly troubled business". The valuation basis? "Emap valued its B2B arm at 11 times its forecast earnings for the year to next March. That’s not so different from the valuations attached by investors to its rivals".

If that's considered high, what then are we to make of a market which currently values Alibaba at 207 times its 2007 forecast earnings? Yes, the China market is growing faster than EMAPs home market and Alibaba is not burdened with the legacy of advertising-dependent magazines. But surely, Global Sources' valuation which today sits at a p.e. of 37.95 (US$1.17bn) reflects that more reasonably?

I'm sure my friends at Alibaba feel that we're being unfair to them. Our posts have focused on this issue for a while. If the market's willing to value their shares at this price, so what? Fair point perhaps. But, unless a vast array of other B2C Internet businesses are injected into the Alibaba listed company or some suprising acquisitions are made elsewhere in the world (they can afford it), it's hard to see anything other than under-performance down the road for those investors who have bet big on the giant of China B2B.

Monday, December 17, 2007

Interesting piece over the WSJ/Hindustan Times MINT site about Alibaba's ambitions for India. Brian Wong is quoted as saying that they currently have 340,000 users in India and expect to double that figure by the end of 2008. However, he told Indian journalists:

“Depending on the response, we will decide on the opening of our offices or acquisitions in India. However, we don’t have any immediate plans of the kind,” Wong said.

Hmm. Sounds a bit tentative doesn't it? He also noted:

“Around 60% of the overall IPO funds will be used for strategic acquisitions and business development globally, as also for acquisition of technologies,” he said.

We wait with bated breath. There ain't the makings of a plan worth US$17 billion (today's market cap) in those quotes.

Update: Interesting that no sooner have I read this than I find another household name, and arguably the kings of global sourcing, looking to double its activity in India. Fons points to a piece about Li & Fung which currently does 6% of its business in India.

Wednesday, December 12, 2007

I have just arrived in Paris to see that the expected game of musical chairs at Dow Jones in advance of the Murdoch takeover has started with a vengeance. There are strong Asian connections to two of the key players:

L. Gordon Crovitz will step down from his publisher of The Wall Street Journal, exec VP of Dow Jones and president of its Consumer Media Group. He is former editor of the Far Eastern Economic Review in the early days of its DJ ownership and while it was a still a weekly news magazine. Crovitz will apparently still write a column for the WSJ.

Crovitz will be succeeded by the current editor of Murdoch's London Times, Robert Thomson. Although he has held a series of high profile positions in London since the early 1990s, first at the FT and then more recently at the helm of the Times, Thomson worked as an FT correspondent in Beijing between 1985 and 1989 and then in Tokyo from 1989 - 1994. We met a few times in Beijing, both in our mid-20s and he was a clearly a man with a strong career before him.

Lenovo's Liu Chuanzhi: "We are not afraid of the coming winter, and we will do what we should do in the winter".

Make of that what you will but don't go out without your vest.

Speaking of Alibaba, we also stumbled across their online magazine or e-zine, Ali Biz. There's a nice picture of our friend Brian Wong on the cover of the 3rd edition. I wonder if it will make it into print? I personally like e-zines but I know lots of people (especially advertisers) don't.

And, finally for this morning, no surprise to see that Global Sources has unloaded its stake in HC International back to IDG's VC funds. They are claiming a $2 million profit on the transaction although the explanation of the calculation on p.2 of the press release requires some mental gymnastics a bit beyond me. The writing was obviously on the wall for this from the moment that they announced they would be going ahead and launching their own Chinese language sourcing sites.

Monday, December 10, 2007

About 5 years ago, I was in India, looking at the IT media market for one of my clients. One of the most interesting discussions I had was with IT Nation, a VC-backed IT media start-up. They've actually branched back into print magazines, but one of the key pieces of thinking then was that an online-led approach would give them access to small metropolitan markets that were uneconomical to serve in print.

I remember this when I read this piece today on contentsutra.com. As you can see from the chart, the share of Internet use of the top 8 cities has shrunk from 77% in 2000 (when there were just 5 mn users in India) to 38% (when there are 46 million). According to this research, the 'tiny' cities with less than 500,000 inhabitants now make up 29% of India's Internet users. There are, as always, some health warnings with these numbers and I don't know how many <500,000 cities there are in India (any volunteers out there with that information?). But, it's pretty clear to me that as a B2B or technology publisher in India, you're not likely to be touching these people with print titles, let alone F2F. Online is the only way.

Friday, December 07, 2007

We've written a few times recently (and here and here) about some of the slightly odd deals going down at Kenfair, including its purchase of a coal mine (Kenfair's owners will, in turn, sell a large chunk of the company to the owner of the coal mine - go figure).

Well, something else is going on this week. There is a basic stock market announcement regarding "Unusual Trading Volume Movements". A glance at this Yahoo! Finance chart (click on it to make it bigger) will show you what they're talking about.

You can see a big volume spike late on Tuesday afternoon and again in the middle of Thursday afternoon. Both look to be purchases of around 17.5 million shares. That's around HK$18.5 million based on this week's average price. As the market cap would have been around HK$370 million at that price, that comes in at 4.9%, a hair below the 5% level at which a buyer has to declare their hand. So, whoever made those two purchases got around 10% of the company. As the price chart shows, the market only noticed this on Friday morning, pushing the share price up 7.5% on the day.

I guess this kind of thing has to be more fun than actually running an exhibition business. Kenfair says it is unconnected to the transactions.

An interesting post today from Eddie Choi on CEO blogging in the B2B world in Asia. He lists a number of blogs generated by the major B2B sites, most of which I wasn't previously aware of. So, thanks for this Eddie:

They're worth a look because each of them has a distinct 'signature' look and feel which makes it absolutely clear where they come from. The Global Sources blog unashamedly promotes Global Sources and not much else. DH Gate's blog tries to tell the story of trading online with China while Tootoo's blog is a bit confusing.

The Netsun Forum has more of the feel of a BBS which, while out of favour in many other places, remains very popular in China.

Thursday, December 06, 2007

Deustche Bank may have been one of the sponsors of the Ali-IPO but their initial coverage starting today with a "Sell" recommendation saw an 11.5% fall in the Alibaba share price to HK$32.90. This, on a day that the Hang Seng Index rose 0.75% to get back within a hair of the 30,000 level. DB is projecting a 'fair' value off HK$26.70.

Meanwhile, my colleague Mark points out that the over-quoted so-called 'guru' Jim Rogers, who has for months and months been saying there is NO bubble in China has changed his mind. Today he decided there is after all a bubble in China and Hong Kong. But what is the one stock he thinks is not overvalued? He met Jack Ma and yadda yadda yadda....

Wednesday, December 05, 2007

I had just got off the phone with a reporter who was asking me what was the significance of the Li Ka Shing/Facebook deal. Speculations is rife in Hong Kong that the real significance of this will be a Facebook link to the Tom Group, giving them a leg-up into China. Murdoch's MySpace is already there along with a raft of local Chinese sites.

I'm not clear how big a deal the social networking phenomenon is yet in China. There seems still to be a strong preference there for more BBS-style communities. I am not, though, really an expert in this field and am very ready to stand corrected if I'm wrong.

Update: BusinessWeek's view on the eBay/Yahoo! Japan deal is an interesting one. They say its "less a comeback than a shrewd move to tap into the Japanese market without having to start from scratch".

Another update: Tangos, as often, has more meat to put on the bones here over on his China Web 2.0 Review blog. There's some interesting stuff here, particularly about Facebook's possible China acquisition strategy and company called Fenbei.com.

Tuesday, December 04, 2007

All those who thought that Alibaba would trade slowly downwards after the excitement of the IPO are going to have to rethink their positions. Step forward yours truly - do not buy a stock tip from this man!

I see that yesterday it hit an all time high of HK$41.80 before settling down to a close of $38.65. That valued the boys in Hangzhou briefly at a hair over HK$211 billion (US$27 billion). Heck they could buy Facebook, have change to spare to pick up the entire remainder of the Asian B2B media sector and still have enough change for another 7,000 sq. foot penthouse in the most expensive building in Hong Kong.

For years, senior executives at the big business media companies have been eyeing the rich trade fair portfolios of the national trade promotion organisations such as the Hong Kong Trade Development Council and TAITRA in Taiwan. Any discussions about the possible acquisition of these portfolios has been rebuffed with a brusque "not possible".

Well, we gather that the Dept. of Export Promotion in Thailand is in the early stages of reviewing bids for its entire trade fair portfolio. How that plays out will be interesting to see although we would assume that a company with very strong Thai connections will be preferred.

What interests us, though, is how much of a dent this puts in the "not possible" argument from HKTDC and others. Expect to hear a bit more about this in the coming months. In what, in major M&A terms, has to be considered a target-poor environment, these are potentially very rich prizes and could represent the biggest B2B acquisitions ever done in Asia (if you exclude Yahoo!'s $1bn investment in Alibaba 2 years ago). Much as the Executive Directors of the big NTPOs would wish the business media companies would go away, you can be sure that they won't.

Monday, December 03, 2007

Li Ka Shing is: "investing in Facebook". That presumably is his current status if various news feeds are to be believed (see here). Maybe he will get his own page after having invested $60 million.

As some of you know, I've been tracking this all for a while, trying to work out whether there are any implications for B2B media. So far, my one man jury remains firmly on the fence. I'm not sure that this courageous position will be swayed by LKS's punt but the man is rarely wrong. There's money in them thar' pages, you can bank on that.

It's certainly fun, and it's certainly addictive. Check out the picture of our team on the BSG Facebook page. But whether it's relevant to B2B media, I still really can't tell.

In Bangkok for the next couple of days, so posting may be thin until I'm back in HK on Wednesday.